S&P 500 Futures On Brink As Banks Lead Losses on Libor Probe

The selling started as Europe opened last night and despite a few pull-backs to VWAP, has continued all morning. S&P 500 futures have crossed the chasm and are heading back to new cycle lows here as the major financials are being sold aggressively on the back of tomorrow's release of the NY Fed's Libor report (among other things we are sure) and have given up all their post EU-Summit gains. USD strength, commodity weakness (with Silver And Gold leading the charge lower this week now) and Treasury yields back to yesterday's post-auction spike lows. VIX up to 19.5% and correlation rising very systemically.

S&P 500 futures broke initial support and are teetering on the brink here...

Good question. Things are getting a bit oversold and some support levels are coming up but a wave of LIBOR lawsuits against the banks is the type of thing that could possibly make people question the Bernanke put. Once that question becomes contagious many years of manipulation could disappear really fast [insert definition of really fast]. Oversold becomes unimportant when the rules change. The Fed can't backstop a serious LIBOR related assault and I've been scratching my head wondering why this thing ever saw the light of day and why now.

In a survey of 500 senior executives in the United States and the UK, 26 percent of respondents said they had observed or had firsthand knowledge of wrongdoing in the workplace, while 24 percent said they believed financial services professionals may need to engage in unethical or illegal conduct to be successful.

Sixteen percent of respondents said they would commit insider trading if they could get away with it, according to Labaton Sucharow. And 30 percent said their compensation plans created pressure to compromise ethical standards or violate the law.

The tradeoff with regulation is the monopolies and barriers to entry it creates. Aside from the inherent limitations of monitoring and enforcement, as well as compromised enforcement/regulatory capture.

I'll posit that given the "living" nature of regulation, it is impossible for it to maintain stasis... we start tacking on laws and that process doesn't stop until the economic engines cease to function... rinse, wash, repeat.

You don't understand! Just like the solution to crippling debt is more debt, the obvious solution to the complete failure of all of our regulations and regulators is clearly more regulations and regulators!

900K lawsuits lined up already against the banks, their stocks should be falling off a cliff today. Reality off day compared to what it should be. Hedge funds and large investors need a week or so to unwind from their bank holdings so we won't see the real drop until they get out. Yep, free market trading is what it's all about...

hey thats not Biderman, thats an alien wearing a Biderman suit.... LOL. Nice clip they both look so young there. Biderman has changed his views dramatically, I guess once you get schooled by Peter your never the same.

As if the Libor report will be any more realistic that the Stress Tests. They'll acknowledge possible manipulation, but that it only amounted to negligible changes, small fine and then the obligatory "we are on the case, so this won't get any worse" because we all know regulators always spot fraud.

Tyler, please correct me if I'm wrong, but I'm assuming Lehman part of the BBA back in 2008. If so, wouldn't the suppressed LIBOR rates have lured in new investors, thinking the bank was healthier than it really was? As the FED has already acknowledged it knew about the manipulation dating back to 2007, couldn't a legal case be made against the regulators for misleading investors?

Again, this is all within the scope of the FED being responsible for thousands of financial crimes for the sake of 'systemic stability.' However I feel this case could be rather easy to make, and discovery could shine a light on other areas of wrongdoing by the FED. This would also put the FED under the scrunity of the courts, not Congress, which has been a complete circus.

Over 1/2 the losses erased already, silver originally in the red now in the green. Energy sector short pounding continues (meaning the companies not necessairly the commodities). USD still up.

Plunge Protection Team in action. Thinking they will try to close this green again, only to be sold into 'strongly' (haha) at the close. All dog and pony for the remaining masses playing in the rigged market casino.

And all the while business as usual (print and spend until it doesn't hurt anymore) with the powerhungry and unstainable elite. I guess there arn't enough PMs, guns, and ammo in enough slaves hands for confiscation (ahem re-allocation) yet for the global crackdown.